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  • Ty Stapleton

The evolution of sports betting

Updated: May 2, 2022

By Ty Stapleton

One of the most popular and common interests among the American people are their beloved sports.

Whether it's professional or college, nearly every household has a team that they root for. Major sporting events such as the Super Bowl are treated like national holidays, with millions of people tuning into watch every single year. However, in recent years the focus seems to have shifted.

The popularity of sports has brought with it the concept of sports betting, a somewhat touchy subject that has blown away economic expectations in recent years.

Sports gambling in the United States was legalized by the Supreme Court in 2018. The Supreme Court struck down a 1992 federal law that banned commerical sports betting in most states, which opened the door to access the estimated $150 billion in illegal wagers on professional and amateur sports.

This created a massive boom in states’ investment into sports gambling as a whole, and impacted many areas of professional sports.

Evolution of legal sports gambling

In the early 19th century sports betting was focused on horse racing; there was no such thing as a spread and placing a legal bet required a trip to a Vegas casino.

But in recent years sports betting has transferred to other sports such as baseball, football and basketball.

And as the federal legalization of sports betting came to be, states slowly became more involved in this extremely money-driven industry, ultimately pairing with their local statewide casinos to help back these state owned books.

The impact that legalization of sports betting has is so massive that the amount of money wagered actually doubled in a single year, going to an all time high of $52.7 billion in 2021.

This money is of course registered and legal, as many others get involved in illegal sports gambling books, so in theory this number is much higher.

Considering so much money is involved, the question has become what aspects of the sports world are being impacted, who can take advantage of this new betting world, and who is unfortunately going to fall off?

Understanding sports betting

Sports betting is a difficult concept to grasp at first; you have to understand what people are betting on and what “the lines of the game” mean.

The most common are the spread, the moneyline and the over/under. These lines are based on the talent of each team and the tendencies each have in their gameplay style based on how they have recently played.

The spread is how much the better team is projected to win by, and the moneyline is how favored the team is to win the game straight up is, and the over/under is how many points in the game are going to be scored. It's important to understand how to gamble and how the lines are set up before throwing actual money on any of the games.

For example, if the New York Yankees are playing the Boston Red Sox, and you want to bet on the Yankees to win the game, you would place a bet on the moneyline, which will be different for each game. In this case, it's a projected close game so the Yankees are favored -120, which means you must bet $120 to win $100 on that bet.

The legalization of sports betting has been so instrumental for gambling’s growth. In June 2018 when the bill was first passed, the amount of money gambled in a month was around $300 million, compared to October of 2021 which was around $7 billion.

This nearly 20x increase has been caused directly by the implementation of legal sportsbooks, and the pairings between popular local casinos and online platforms. Prior to this legalization, there was a negative connotation involved with sports betting, but it has now shifted to something that many fans and spectators have focused on, in some cases even more than the hometown teams.

The organizations and media partners have seen a huge leap in the viewership numbers of fans based off of tv and attendance rates over the years. A lot of this has to do with the expansion of sports betting as nearly 50% of all sports bettors watch a game every single day. The total overall viewership has increased by 2%, which is a very large number of people watching more each year. But it’s not just viewership that is increasing. Revenue to the NFL increased by a few billion dollars.

The idea of making money, getting higher attendance rates, and growing the television audience has led to professional sports teams and leagues embracing sports betting and taking advantage they can get out of. The pregame news broadcasts are also taking a share in the pot of sports betting, as now they have introduced shows on ESPN that are strictly about predicting the games and talking about the spread lines. It is an extremely noticeable shift as the idea of being a die hard fan for a single team has kind of faded away.

Sports gambling has existed for decades but with the recent Supreme Court case legalizing it within states, it has developed into a multi billion dollar industry.

With the integration of online gambling sites, partnerships between casinos and professional sport teams, and the federal legalization of sports betting the industry has exploded in popularity over recent years with the most recent annual sports betting market hitting $71.53 billion in 2021, a $5 billion increase in just a single year, and is expected to be valued at over $140 billion by 2028.

The rise of sports betting

On May 14th 2018, the U.S. Supreme Court issued a decision to remove the federal ban on sports gambling, allowing each state the ability to legalize sports gambling, something that has been outlawed since the early 1960s.

This decision was highly anticipated, as the market for sports betting was noticeably growing, and the economic advantages for the government to get involved were too large to ignore.

States began scrambling to push through laws to approve the legalization, the first few being Delaware, New Jersey, and Montana.

A major motive for states to legalize sports betting was the ability to control the taxes it brings with it. In the first month that New York legalized sports betting, it saw $1.5 billion wagered, and over $70 million collected in tax revenue, in a single 30 day period.

David Fucillo, the head of sports betting content at SB Nation, explains the economic impact in some of the first states.

“New Jersey has led the way with $25.1 billion in revenue. Nevada is second at $22.6 billion, and Pennsylvania follows with $13 billion," he said.

The money that each state is able to tax on allows for projects such as education, public works, or youth sports to receive a huge budget increase. The legalization also allows for further control of the betting as well.

It is believed that nearly $150 billion is lost to illegal sports wagering each year, which is a large sum of the expected wagering amounts in total over the course of twelve months.

With states now being able to track and control the wagering amounts, they have access to tax this money, thus boosting the economy.

Along with the legalization of sports betting, the accessibility of it has dramatically increased as well. The creation of online sports books has allowed for fans to bet and gamble from their own personal computers at home, through registered websites with partnering casinos such as Draftkings or Fanduel.

“All sportsbooks are looking to add customers as quickly as possible. DraftKings and FanDuel have spent a ton of money for customer acquisition as they open in new states, and also to prepare themselves for when states like California and Texas eventually go online,” says Fucillo.

The importance of this is simply that people no longer have to venture to their local casino to place sports bets, and instead can place them online, in minutes, simply from their laptop or even cell phone.

Draftkings reported $644 million in revenue in 2020 from their online sports books, up nearly 50% compared to the year prior.

Many fans are drawn to the simplicity of placing a bet online, and the revenue amounts show that popularity has steadily increased since the form of online betting has become more and more popular.

“We know people gamble, but when it was illegal, nobody was going to be able to get an accurate gauge on who did what and how to potentially convert users.” Fucillo explains.

Considering many fans find the concept of betting to be entertaining, it's not surprising that major sport networks such as ESPN have created their own segments about it.

In the early afternoon, ESPN has a segment referred to as “Chalk '' where they discuss their best predictions, spread covers, and trends going into that night's game.

It's a fairly new segment, and has grown in popularity with the gambling audience, having nearly a 30% spike in viewership ratings for the network. Similar to the states, the major sport networks want a share of sports betting fever, and show signs of growing their gambling segments even larger, as the popularity continues to grow as well.

“The market will continue to grow with the three biggest states in America (in terms of populatio) still not online. It will take some time, but we should eventually see California, Texas, and Florida legalize sports betting in some form. Beyond that, the biggest growth will be through in-game wagering” says Fucillo.

Illegal vs legal sports betting

Before 2018, all sports betting in the United States was illegal. It was very difficult for people

to find loopholes in the system that allowed for them to wager on lines for the game.

Fans began to create these websites of their own, that allowed for them to bet on the game, although illegal, but still the same idea.

The website would be based on a predetermined credit, and the user would bet based on how much credit they have left.

These websites would be run by someone referred to as a “bookie” who is in charge of all the money, and looking over the wagers to keep track of everything.

A system that is totally and completely illegal to this day, was shown to be generating money in the billions of dollars.

After the legalization of sports betting was passed, the illegal part depended on the location of the bettor, a system that the government felt they were better suited to control. Someone who understands the difference between illegally vs legally is a local “bookie” who works with over 50 people on his own illegal sheet.

Referred to as Mike, a pseudonym to protect his identity, explains what these differences may be.

“My book is technically illegal because there are no regulations on where you can bet from, there's also no partnering with any registered casino or sportsbook. Not all 50 states legalized online sports betting, however with my book you can just login and set up an account from anywhere.”

With Mike's online platform, people are able to bet on whatever game they want, from wherever they want, and it all goes untaxed.

“It is through a website, and not a casino so that is also illegal, because nothing gets taxed, from me or any of the clients on the book. It's mainly about the fact that you can bet in states where it's illegal, and nobody else benefits from your betting but yourself.” says Mike.

The governments issue with these clearly being they are not able to make any money off of the profits from these online books, which has caused for many investigations to attempt to limit these online platforms.

The lack of control is what causes these platforms to remain illegal as well, and with the magnitude of money being wagered, the government cannot afford to ignore this industry. The implementation of online betting has caused an explosion of illegal betting, especially in recent years when fans would rather not involve their gambling habits with the government.

The online websites are the easiest and most accessible way for people to illegally bet, and they can oftentimes get paid out through popular apps such as Venmo or Zelle. The path to illegal sports betting has completely opened up, and the ability for everyday people to access these online platforms will continue to create a problem for the government as they lose out on billions of taxable dollars in a single year.

Advantages of those involved

The advantages of sports betting does not limit itself to the financial or economic benefit of the individual or the team, it grows larger than that.

Sports betting undoubtedly helps to create news and buzz about teams or games that wouldn't normally get the same kind of attention.

It has become an ongoing joke, people betting on very random and low competitive teams, just being that's what's on television, but there is a positive that comes from that.

The NCAA specifically has a massive deficit in the rate of viewership between major and mid-major competition in college sports.

Sports betting has allowed for people to want to watch these teams, learn more about the players and the trends of their season. It also encourages major sport networks to cover these games as well, as they know their viewers are going to want to hear the inside information about it.

Lizzy Cochrane, who worked as a social media manager for Barstool Sportsbook during the summer of 2019, noted that sports betting brings more attention to all teams.

“If anything it brings attention to lower market teams that don't get any prime time attention, and gives people a reason to watch these games,” Cochrane said. “The viewership numbers go up, and the publicity about the players will increase as well, it creates an overall hype for so many of the teams that wouldn't be talked about originally if it wasn't for sports betting.”

As a part time worker at the popular Barstool Sports, Cochrane noticed that the difference in games being covered loomed very large, and some of these teams she would do research on she's never even heard of.

Another advantage comes in regard to the partnerships between casinos and professional sport organizations.

The inclusion of sport books in places such as stadiums and local bars has increased recently, a major one being the caesars sportsbook and restaurants opening at Chase field, home of the Arizona Diamondbacks.

Caesars sports announced that a collaboration between themselves and the popular chef Guy Fieri will be opening a 20,000 square foot restaurant / sportsbook that will be located inside the stadium for this upcoming season.

This is a major step forward for the inclusion of sports betting in professional sports, as fans will now be able to literally gamble on the game, while being at the game. The stadium and organization of the Diamondbacks themselves will be able to receive revenue from the wagering amounts, and the collaboration with the popular casino of Caesars is going to draw in a lot of people.

The advantages of sports betting grow much larger than was initially expected of it. It has created a scenario where people are becoming more educated on smaller teams, viewership is increasing, and collaboration is on the rise.

To conclude, the expansion and explosion in popularity of sports betting has been a long time coming. The American people are incredibly devoted and invested into their sports, they are more than willing to take the next step to invest their own money into it as well.

It's a different version than, say buying a jersey to support a team, or a pack of baseball cards in the hopes of drawing your favorite player. However, in its own way it draws another unique connection between the fans and the professional or collegiate sports around them.

This industry is one of the fastest growing, with an incredible amount of money involved, and it's still only been legal for 4 years. The importance of the legalization and the introduction of online sports betting has created a perfect storm for a multi-million dollar industry to grow and expand into a multi-billion dollar one.

Sports betting will not go away anytime soon, it's more viable that it grows larger before it gets any smaller, and it's something that professional teams, as well as at the collegiate level are fully prepared to take advantage of.

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